The SEC charged Peter Madoff with fraud, making false statements to regulators, and falsifying books and records, in order to create the illusion that Bernard L. Madoff Investment Securities LLC’s (“BMIS”) had a functioning compliance program in place.  The SEC alleged that Peter Madoff was responsible for creating compliance manuals, written supervisory procedures, reports of annual compliance reviews, and compliance certifications which were never implemented or performed.  The documents were merely created to paper the file.

According to the complaint, from 1969 through December 11, 2008, Peter created compliance materials for the sole purpose of papering the firm’s files.  Peter’s misconduct was instrumental up until the BMIS’s final collapse, when Bernie Madoff allegedly told Peter that there were insufficient funds to pay investors and recruited Peter to help him decide which family, friends and employees to receive what was left of the clients’ funds.  At the same time, Peter rushed to withdraw approximately $200,000 for himself from BMIS’s bank account.

In a parallel action, the U.S. Attorney’s Office for the Southern District of New York announced that criminal charges were filed against Peter Madoff.  The SEC stated, “Peter Madoff helped Bernie Madoff create the image of a functioning compliance program purportedly overseen by sophisticated financial professionals … [t]ragically, the image was merely an illusion supported by Peter’s sham paperwork and false filings for which he was rewarded with tens of millions of dollars in stolen investor funds.”  According to the SEC, Peter used these fraudulent proceeds to support a luxurious lifestyle at the expense of BMIS’s clients.